Indian Cellular Association (ICA), the apex body of the mobile industry, has appealed to the Tamil Nadu government to reduce Value Added Tax (VAT) on handsets to 5 per cent from 14.5 per cent.
ICA National President Pankaj Mohindroo in his letter to Chief Minister O. Panneerselvam said, “The Value Added Tax should be reduced from 14.5 per cent to 5 per cent floor level in Tamil Nadu to help traditional brick-and-mortar retailers be competitive on pricing against online portals.”
“E-commerce websites can bill from any of the 25 lower tax locations in the country which follows the IT floor rate of five per cent,” Mr. Mohindroo said in his letter.
Tamil Nadu gets zero revenue on e-commerce transaction due to high VAT percentage of 14.5 per cent. More than 20 per cent of mobile phone market in Tamil Nadu is now occupied by e-retailers, he said.
